#1
What is the law of demand in microeconomics?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#2
What is the law of diminishing marginal utility?
As consumption increases, marginal utility decreases
ExplanationDeclining additional satisfaction from consumption.
#3
What is the difference between a normal good and an inferior good?
A normal good has a positive income elasticity of demand, while an inferior good has a negative income elasticity of demand
ExplanationIncome's effect on demand for different goods.
#4
What is the difference between a perfectly elastic demand curve and a perfectly inelastic demand curve?
A perfectly elastic demand curve is horizontal, while a perfectly inelastic demand curve is vertical
ExplanationResponse of quantity demanded to price changes.
#5
What is the concept of a Giffen good in economics?
A good for which demand decreases as income increases
ExplanationUnique demand behavior with income changes.
#6
What is elasticity of demand?
A measure of how much quantity demanded responds to a change in price
ExplanationSensitivity of demand to price changes.
#7
In a perfectly competitive market, what is true about the price and marginal revenue?
Price is equal to marginal revenue
ExplanationEquality between price and marginal revenue.
#8
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationRatio of quantity change to price change.
#9
What is a normal good in economics?
A good for which demand increases as income increases
ExplanationGoods with positive income elasticity.
#10
What is the law of supply in microeconomics?
As price increases, quantity supplied increases
ExplanationDirect relationship between price and quantity supplied.
#11
What is a price floor?
A legally established minimum price for a good or service
ExplanationGovernment-imposed lower limit on prices.
#12
What is the Coase theorem in microeconomics?
A theory about the importance of property rights in resolving externalities
ExplanationProperty rights' role in addressing externalities.
#13
What is the difference between economic profit and accounting profit?
Accounting profit includes explicit costs, while economic profit includes both explicit and implicit costs
ExplanationInclusion of implicit costs in economic profit.
#14
What is the tragedy of the commons?
A situation where a common resource is overused and depleted due to lack of private ownership
ExplanationOveruse of shared resources without regulation.
#15
What is a monopoly in microeconomics?
A market structure with one seller and many buyers
ExplanationSingle seller dominating the market.